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2018 (7) TMI 1710 - AT - Central ExciseCENVAT Credit - credit was denied in terms of Rule 11(3) of Cenvat Credit Rules, 2004 - Held that - As per Rule 11(3)(ii), if the final goods is exempted absolutely then the whole of the credit lying in Cenvat Credit shall lapse - Admittedly, in the case in hand, the product manufactured by the appellant is exempt conditionally as Notification No. 04/2006 dated 01.03.2006 at Sr. No. 90 exempts the goods manufactured by the appellant upto 3500 MT. Therefore, the exemption under the said notification is not absolute - the provisions of Rule 11(3)(ii) of the Rules are not applicable to the facts of this case and the condition of Rule 11(3)(i) of the Rules has been complied with by the appellant - credit allowed - appeal allowed - decided in favor of appellant. CENVAT Credit - time limitation - the Cenvat Credit has been utilized by the appellant in the month of June, 2010 for payment of duty of the said month - Held that - The SCN issued to the appellant on 03.08.2011 is barred by limitation, as the availment of Cenvat Credit was well known to the Department in advance. Therefore, the extended period is not invokable - appeal allowed. Appeal allowed - decided in favor of appellant.
Issues:
1. Denial of Cenvat Credit at the time of opting for exemption under Notification No. 04/2006-CE dated 01.03.2006. 2. Interpretation of Rule 11(3) of Cenvat Credit Rules, 2004 regarding lapsing of Cenvat Credit. 3. Applicability of the extended period of limitation for issuing show cause notices. Issue 1: Denial of Cenvat Credit at the time of opting for exemption under Notification No. 04/2006-CE dated 01.03.2006: The appellant, a manufacturer of paper and paper board, appealed against orders denying Cenvat Credit when opting for exemption under the mentioned notification. The exemption allowed up to 3500 MT per year if raw materials were from unconventional sources. The appellant reversed Cenvat Credit on inputs, semi-finished, and finished goods upon opting for exemption. In one case, the Revenue claimed the appellant couldn't utilize unutilized Cenvat Credit post-reversal, citing Rule 11(3) of the Cenvat Credit Rules, 2004. However, as the exemption was conditional, not absolute, the Rule didn't apply, following a precedent (Jansons Textile Processors case). The demand was set aside. Issue 2: Interpretation of Rule 11(3) of Cenvat Credit Rules, 2004 regarding lapsing of Cenvat Credit: In another case, the Revenue issued a show cause notice invoking Rule 11(3) for utilizing Cenvat Credit after opting for exemption. However, the notice was deemed time-barred as the Department was aware of the credit utilization well in advance. Citing the Nizam Sugar Factory case, the extended period wasn't applicable, rendering the demand unsustainable. The impugned order was set aside, and the appeal was allowed due to the limitation issue. Issue 3: Applicability of the extended period of limitation for issuing show cause notices: The judgment highlighted the importance of adherence to statutory provisions and case law in determining the validity of demands and appeals. It emphasized the need for timely action and proper interpretation of rules to ensure fairness and compliance with legal requirements. The decisions in both cases were based on a thorough analysis of the facts, rules, and precedents, leading to the allowance of the appeals and relief for the appellant. This detailed analysis of the judgment from the Appellate Tribunal CESTAT ALLAHABAD provides insights into the legal intricacies surrounding the denial of Cenvat Credit, interpretation of rules, and the applicability of the extended period of limitation in such cases.
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